These are some of the compliance-related stories that recently caught my attention.
Companies Need to Pay More Attention to Everyday Unethical Behavior
by Yuval Feldman
Harvard Business Review
Numerous studies- have documented the prevalence of practices such as stealing office supplies, inflating business expenditures reports, and engaging in behaviors that raise conflicts of interest. While these may sound negligible, these violations reduce trust over time and alter prevailing business and legal norms. Their aggregated effect can be quite harmful.
Behavioral ethics research suggests that this type of misconduct occurs not because people are unethical or deliberately choose to act unethically, but because they fail to understand that their behavior is indeed unethical and can have harmful consequences. Studies show that employees have a “blind spot” that prevents them from seeing the ethical and legal meaning of their own behavior.https://hbr.org/2019/03/companies-need-to-pay-more-attention-to-everyday-unethical-behavior
Insider Guessing Can Still Land You in Jail
by Caitlin M. Poe
The National Law Review
But what does it mean to learn secret company information?- Usually, this issue is also straightforward enough.- The insider has received testing results for a product, or has worked on an upcoming merger, or has seen the earnings report in advance of release.- But what if the insider hasn’t been told something, but instead makes an educated deduction that turns out to be right?- Is insider guessing illegal?https://www.natlawreview.com/article/insider-guessing-can-still-land-you-jail
Andreessen Horowitz Is Blowing Up The Venture Capital Model (Again)
Why? Well, venture capitalists have long traded a lack of Wall Street-style oversight for the promise that they invest mainly in new shares of private companies. It was a tradeoff firms gladly made—until the age of crypto, a type of high-risk investment the SEC says requires more oversight. So be it, says Andreessen Horowitz. By renouncing its venture capital status, it’ll be able to go deeper on riskier bets: If the firm wants to put $1 billion into cryptocurrency or tokens, or buy unlimited shares in public companies or from other investors, it can. And in doing so, the thinking goes, it’ll again make other firms feel like they have one hand tied behind their back.-
Prof. Coffee Testifies on Insider Trading Legislation Before the House Financial Services Subcommitee on Investor Protection
By John C. Coffee, Jr.
The CLS Blue Sky Blog
I have been asked to comment on several proposed bills, all of which I basically support, but I will focus my limited time today primarily on Congressman Himes’ Discussion Draft of an “Insider Trading Prohibition Act.” I want to commend Congressman Himes for having supervised the drafting of a very careful, balanced and sophisticated bill that should serve as a model for a long overdue effort to codify the law of insider trading. To date, the law of insider trading has been solely the product of judicial law-making, and courts have been confined by the words set forth in Section 10(b) of the Securities Exchange Act of 1934. In effect, insider trading is the best example of a common law crime that survives today.http://clsbluesky.law.columbia.edu/2019/04/03/putting-investors-first-reviewing-proposals-to-hold-executives-accountable/
SEC Nominee Emerges
by Matt Kelly
[Allison] Lee previously worked at the SEC from 2005 to 2018, including a stint as counsel for former Democratic commissioner Kara Stein, who stepped down from the SEC in December. So essentially, Lee would replace her former boss. If confirmed, Lee would serve until 2022.http://www.radicalcompliance.com/2019/04/03/sec-nominee-finally-emerges/
Leave it to Trump to show us how not to hire a CCO
By Joe Mont
According to a report this week in the Wall Street Journal, George Sorial, who worked for The Trump Organization since 2007 and served as chief compliance counsel, is stepping down from that post. The stated reason: He wanted extra time to promote a new book he co-authored.https://www.complianceweek.com/news/opinion/leave-it-to-trump-to-show-us-how-not-to-hire-a-cco